Germany has its own JP Morgan, the bank that could do no wrong and got bailed out by the Fed and the taxpayer while CEO Jamie Dimon walked on water with a nimbus above his head, at least in the eyes of the government. Until the layers of obfuscation came off. What emanated was the acrid stench of internal putrefaction. Now the fines and settlements are piling up in the tens of billions of dollars.

The same acrid stench of internal putrefaction has been emanating from Deutsche Bank, arguably the most powerful institution in Germany, and one of the most precarious, long coddled by the government and once unassailable by politicians. It too has been mired in a swamp of scandals, investigations, lawsuits, fines, and settlements.

Just last Wednesday, the European Commission fined the largest banks involved in the Libor rate rigging scandal $1.7 billion, of which Deutsche Bank got hit with the lion’s share of €725 million ($1 billion). The bank’s long résumé includes the carbon-trading tax-fraud scandal that broke with a televised raid by 500 police officers on its headquarters. It had known for years about the havoc commodities speculation wreaked on food prices, and on people in poor countries, but had lied to the German Parliament about it [Lies, Damned Lies, And Banks: Deutsche Bank Caught Again].

Now a letter from Germany’s Federal Financial Supervisory Authority (BaFin) to Paul Achleitner, chairman of Deutsche Bank’s Supervisory Board, was leaked to the Spiegel. It blasted the bank’s internal investigation into senior management’s role in the Libor manipulations; the bank’s report, dubbed “Senior Management Review” (SMR), was a whitewash.

“Significant aspects of the investigation and reporting” had been administered by Richard Walker, BaFin pointed out. Walker, an American lawyer, is General Counsel and member of the Executive Board at Deutsche Bank. Before then, he was director of the SEC’s Division of Enforcement in the US – WHIRRRRR went the revolving door. In his job at Deutsche, he was a member of the same “senior management” that he was supposed to be investigating.

“The SMR’s goal from the outset was to show that senior management was not involved in the alleged manipulation and that it did not have any knowledge of it,” BaFin wrote.

BaFin further told Achleitner in the letter that, due to the “serious violations of the organizational duties that had been discovered,” it had sent “letters of reprimand” to co-CEO Anshu Jain, who was intimately involved with the Libor machinations as he rose up the ranks, and to CFO Stefan Krause, who’d been in charge of the internal audit functions.

BaFin repeatedly pointed out in the letter that Deutsche’s actions had violated the German Banking Act. The Board, according to the law, is ultimately responsible; and BaFin’s threatened it would “review personal measures regarding the personal responsibility of individuals.”

A BaFin spokeswoman refused to comment. A Deutsche Bank spokeswoman also refused to comment on the letter, but explained that the SMR had focused on the actions of current and past members of the Executive Board, but that Walker himself was not in focus. In addition, three independent lawyers directed the internal investigation. Their goal, she said, was to find facts and not to exonerate anyone.

In case people still didn’t get it, she added: “We have already pointed out several times and can repeat today that, according to the current status of the investigation” – the very investigation BaFin had blasted as a whitewash – “no active or former member of the Executive Board was involved in any inappropriate way in the investigated affair of the benchmark rates.”

Like all mega-bankers, Goldman alum Achleitner lashes out at financial regulations every chance he gets, couched in reasonable-sounding verbiage. For example, at the M100 Sanssouci Colloquium in Berlin in 2012, he explained, after effusively praising ECB President Mario Draghi for having saved the euro: “If we over-restrict the functioning of banks and capital markets, we undermine the ability to commit capital to economic activity at a reasonable cost.”

It’s always the same thing: the world cannot survive without giving megabanks free rein to do what they do best. They’re now under investigation for having manipulated just about everything that can be manipulated. At every new scandal, the same handful of names keeps cropping up. Meanwhile, they’re getting larger, concentrating ever more assets, risks, and power amongst each other, and central banks offer explicit backstops and supply them with unlimited amounts of nearly free money so that they can engage wholeheartedly in innovative shenanigans.

But that central bank money hasn’t come without a price. Hidden in the middle of the 25-page minutes of its last meeting, under the most wooden and convoluted prose, the Fed issued a doozie of a warning: it fretted about financial stability. It named soaring forward P/E ratios, stock buybacks, margin credit, and leveraged loans. Read….Plagued By QE Indigestion, Fed Issues Asset-Bubble Warning

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